by VDC staff

The slow pace of Vermont’s education transformation is coming into sharper focus at the Statehouse, as lawmakers wrestle with redistricting maps, rising costs, and mounting property tax pressure.

At the center of the debate is Act 73, a sweeping 2025 education reform law designed to overhaul the way Vermont funds and governs its public schools. The law mandates a shift to a “foundation formula” and directs a task force to propose maps consolidating Vermont’s current patchwork of districts into between 10 and 20 larger “mega-districts” serving up to 8,000 students each.

But that mandate has run aground – at least for now.

Map-making stalls, then restarts

The task force charged with drawing the new district boundaries declined to produce any maps. In response, House Education Chair Rep. Peter Conlon, D-Cornwall, introduced a compromise proposal reorganizing the state into roughly 27 unified districts, each serving between 2,000 and 4,000 students.

Both House and Senate committees reviewed the conceptual map this week, reopening a conversation that has proven politically fraught.

The Vermont Agency of Education has argued that larger districts are necessary to achieve the efficiencies envisioned by Act 73 — including better access to specialized staff, more consistent curriculum offerings, and stronger in-district special education services. Smaller districts, the agency contends, may not deliver enough scale to meaningfully bend the cost curve.

But legislators report widespread public resistance. Much of the opposition centers on concerns about losing local control and community identity. Some lawmakers have floated hybrid governance models that would allow supervisory unions and consolidated districts to coexist, though no consensus has emerged.

Budget pressure: the “Alligator Mouth”

While lawmakers debate district lines, fiscal pressures continue to mount.

The House Ways and Means Committee reviewed preliminary fiscal year 2027 school budgets showing projected net education spending growth of 4.1 percent — lower than earlier estimates but still significant. At the same time, offsetting revenues are projected to decline by 2.2 percent, in part because federal pandemic-era funds are running out.

The Department of Taxes has described the dynamic as an “alligator mouth” problem: Education Fund costs are growing at roughly 6 percent annually, while non-property tax revenues such as sales and use taxes are growing at closer to 3 percent.

Absent structural reform, analysts say property taxes would need to grow by about 7 percent annually to keep the Education Fund balanced.

Property tax relief and the yield bill

The House Ways and Means Committee is now working through the annual “yield bill,” which sets the property tax rates necessary to fund education.

One proposal under discussion is a one-time $104.9 million transfer from the General Fund to blunt immediate tax increases.

Lawmakers are also debating expanded property tax credits for income-eligible Vermonters. Currently, the income sensitivity threshold is set at $90,000 in household income — down from $138,500 in fiscal year 2020. Over the same period, education property taxes have risen by more than 40 percent.

Committee members expressed concern that households earning between $90,000 and $150,000 are being squeezed by overlapping fiscal pressures, including rising property taxes and other state policy changes.

Targeting second homes for more revenue

In search of longer-term revenue solutions, lawmakers are advancing a proposal to split the “nonhomestead” property tax category into two classifications: residential and nonresidential.

The residential category would target second homes and short-term rentals, while nonresidential would include businesses and long-term rental properties. Much of the debate has focused on how to define “long-term rental” and “employee housing,” particularly to protect farmworker housing and resort employee units.

Details are expected to hinge on a new annual “dwelling use attestation” form property owners would be required to file.

Capping future spending

Meanwhile, the Senate Finance Committee is reviewing S.220, a proposal to temporarily cap education spending growth in fiscal years 2028 and 2029. The bill would impose a “dual test” limit, allowing districts to increase spending only by a formula-based percentage or by inflation, whichever is greater.

Supporters describe the cap as a bridge to the eventual foundation formula required under Act 73, offering short-term taxpayer relief while longer-term reforms take shape.

Budget deadline looms

Hovering over the entire debate is Gov. Phil Scott, who has made clear he will not sign the state budget without a finalized district map under Act 73.

That ultimatum effectively ties the end of the legislative session to agreement on redistricting — a task that has already proven politically and logistically complex.

Includes information sourced from Lake Champlain Chamber weekly newsletter.